LATEST EXPORT CONTROLS AND COMPLIANCE UPDATE
Canadian Government Amends The Canadian Export Control List
April 1, 2020: The Government of Canada published an Order amending the Canadian Export Control List to incorporate changes agreed by the Nuclear Suppliers Group and the Australia Group at meetings in June 2018 and the Missile Technology Control Regime and the Wassenaar Group at meetings in December 2018. The Order, which came into force on May 1, 2020, also includes additions, changes, and clarifications of other items on the Export Control List. Order SOR/2020-48 (P.C. 2020-140), is in the Canada Gazette, Part II, Vol. 154, No. 7, on the Internet at http://www.gazette.gc.ca/rp-pr/p2/2020/2020-04-01/pdf/g2-15407.pdf.
U.S. Department of Commerce – Bureau of Industry and Security
BIS Will Not Implement Or Enforce Portions Of The Transition Of USML Category I, II and III Items To The CCL Related To 3D Printed Guns
April 2, 2020 – 85 Fed. Reg. 18438: The Bureau of Industry and Security (BIS) formally notified the public that in accordance with a nationwide preliminary injunction issued in the U.S. District Court for the Western District of Washington on March 6, 2020 (see description of this injunction in March 2020 Regulatory Update), it will not implement or enforce the portion of a rule that transferred control over many firearms and related technologies controlled under U.S. Munitions List (USML, 22 CFR Sec. 121.1) Categories I, II, and III from the State Department to the Commerce Department (85 Fed. Reg. 3819, Jan. 23, 2020 – see description in January 2020 and March 2020 Regulatory Updates) “insofar as [the rule] alters the status quo restrictions on technical data and software directly related to the production of firearms or firearm parts using a 3D-printer or similar equipment.'' Accordingly, BIS stated, applications to export such items should continue to be directed to the U.S. Department of State. (See announcement to similar effect in State Department section below.)
BIS Amends EAR To Expand Requirements On Exports To Military End Use Or Military End Users In China, Russia And Venezuela
April 28, 2020 – 85 Fed. Reg. 23459: BIS amended the Export Administration Regulations (EAR, 15 CFR Parts 730-774) to expand license requirements on exports of items intended for military end use or military end users in China, Russia, or Venezuela. Among the changes, this rule --
- Broadens license requirements in EAR Sec. 744.21 to apply to military end users in China and expands the scope of items in the List of Items Subject to the Military End-Use License Requirement of §744.21 (Supplement No. 2 to Part 744);
- Adopts a license review presumption of denial in Sec. 744.21(e);
- Broadens the definition of “military end use” by expanding the definition of “use” to include any item that supports or contributes to the operation, installation, maintenance, repair, overhaul, refurbishing, “development,” or [emphasis added] “production” of military items;
- Clarifies the controls on exports of “600 series” .y and 9x515.y Export Control Classification Numbers (ECCNs) to China, Russia, or Venezuela by relocating them from Sec. 744.21 to the License Requirements sections of each ECCN;
- Designates regional stability (RS) as the reason for control of these items; and
- Expands Automated Export System (AES) filing requirements for exports to China, Russia, and Venezuela.
This final rule will become effective June 29, 2020.
See FD Associates’ expanded article regarding this rule change.
BIS Removes License Exception CIV From The EAR
April 28, 2020 – 85 Fed. Reg. 23470: BIS amended the EAR by removing EAR License Exception CIV (Civil End Users, EAR Sec. 740.5), from the EAR, which authorized exports of items on the CCL whose ECCNs identify them as “CIV-Yes” and that required a license to the ultimate destination for National Security reasons only to civil end-users in Country Group D:1. This final rule will become effective June 29, 2020.
BIS Proposes Amendment To License Exception APR
April 28, 2020 – 85 Fed. Reg. 23496: BIS proposed to amend EAR License Exception APR (Additional Permissive Reexports, EAR Sec. 740.16) to prohibit its use for reexports of items controlled on the Commerce Control List (CCL, EAR Part 774, Supp. No. 1) for national security reasons to Country Group D:1 countries from Hong Kong and Country Group A:1 countries. This proposal is based on evidence that A:1 countries and Hong Kong may have different standards than the U.S. for approving such exports. Deadline for comments is June 29, 2020.
Department of Homeland Security – Federal Emergency Management Agency
FEMA Issues A Temporary Rule Prohibiting The Export Of Certain Personal Protective Equipment
April 10, 2020 – 85 Fed. Reg. 20195: The Federal Emergency Management Agency (FEMA) issued a temporary final rule prohibiting exports of 5 types of personal protective equipment (PPE) products needed to respond to the spread of COVID-19 without the explicit approval of FEMA. The 5 affected product types (more specifically defined in the regulation) are:
- N95 Filtering Facepiece Respirators;
- Other filtering facepiece respirators (e.g., those designated as N99, N100, R95, R99, R100, or P95, P99, P100);
- Elastomeric, air-purifying respirators and appropriate particulate filters/cartridges;
- PPE surgical masks; and
- PPE gloves or surgical gloves.
Shipments of covered products will be detained to allow FEMA to determine whether to return them for domestic use, issue a rated order for them, or allow the export of part or all of the shipment. An exception in the rule applies to manufacturers whose history of foreign vs. domestic sales meets specified requirements. Violation of this rule can result in a fine of up to $10,000 and/or imprisonment for up to one year. Authorities cited for this temporary rule include the Defense Production Act of 1950, as amended, 3 Executive Orders, and a Presidential Memorandum of April 3, 2020. The rule is effective from April 7 until August 10, 2020. (See following entry regarding subsequent additional exemptions.)
FEMA Issues Exemptions From Prohibition On The Export Of Personal Protective Equipment
April 21, 2020 – 85 Fed. Reg. 22021: FEMA issued a rule exempting the following exports from the April 10, 2020 rule controlling shipments of PPE:
- Shipments to U.S. commonwealths and territories, including Guam, American Samoa, Puerto Rico, U.S. Virgin Islands, and the Commonwealth of the Northern Mariana Islands (including minor outlying islands);
- Exports by non-profit or non-governmental organizations solely for donation to foreign charities or governments for free distribution (not sale) at their destination(s);
- Intracompany transfers by U.S. companies from domestic facilities to company-owned or -affiliated foreign facilities;
- Shipments exported solely for assembly in medical kits and diagnostic testing kits destined for U.S. sale and delivery;
- Sealed, sterile medical kits and diagnostic testing kits where only a portion of the kit is made up of one or more covered materials that cannot be easily removed without damaging the kits;
- Declared diplomatic shipments from foreign embassies and consulates to their home countries (may be shipped via intermediaries (logistics providers) but are shipped from and consigned to foreign governments);
- Shipments to overseas U.S. military addresses, foreign service posts (e.g., diplomatic post offices), and embassies;
- Shipments in transit through the U.S. with a foreign shipper and consignee, including shipments temporarily entered into a warehouse or temporarily admitted to a foreign-trade zone;
- Shipments for which the final destination is Canada or Mexico; and
- Shipments by or on behalf of the U.S. federal government, including its military.
Some of these exemptions require special documentation, and FEMA may waive any exemption at any time.
Nuclear Regulatory Commission
Nuclear Regulatory Commission Suspends General License For Exports of Byproduct Material To Pakistan
April 21, 2020 – 85 Fed. Reg. 22181: The Nuclear Regulatory Commission (NRC) suspended the general license authority for exports of byproduct material to Pakistan that would otherwise be provided under Sec. 82 of the Atomic Energy Act of 1954, as amended and 10 CFR Sec. 110.23. Such exports will now require a specific license in accordance with 10 CFR Sec. 110.31.
Department of State
DDTC Name and Address Changes Posted To Website
April 7 and 10, 2020: The Directorate of Defense Trade Controls (DDTC) posted the following name and/or address changes on its website at
- Change in Name from Firth Rixon Forgings Limited to Forged Solution Group Limited due to acquisition of Firth Rixon Forgings by Arlington Capital Partners (ACP) to operate as part of Forged Solutions Group, ACP’s aerospace forging platform; and
- Change in Name from United Technologies Corporation to Raytheon Technologies Corporation and change of address due to United Technologies Corporation merger with Raytheon Company. (Also, Raytheon Company became a wholly-owned subsidiary of Raytheon Technologies Corporation.)
Each announcement includes a link to a notice detailing the change and its effects on pending and currently approved authorizations involving the listed entity.
DDTC Publishes New And Updated FAQs
March 31 and April 3, 6, and 9, 2020: DDTC published numerous new and updated FAQs. Topics covered include use of technical data following the expiration of Technical Assistance Agreements (TAAs) and Manufacturing License Agreements (MLAs); user guides for the DECCS Registration Application; and provision of defense services prior to DDTC authorization. The public portal for DDTC FAQs is at https://www.pmddtc.state.gov/ddtc_public?id=ddtc_public_portal_faq_landing.
DDTC To Comply With Injunction Related To USML Category I, II and III Changes Related To 3D Printed Guns
April 2, 2020 – 85 Fed. Reg. 18445: DDTC notified the public of the March 6, 2020 preliminary injunction prohibiting implementation of the rule passed on Jan. 23, 2020 (85 Fed. Reg. 3819) that transferred jurisdiction over certain items from USML Categories I, II, and III from the State Department to the Commerce Department “insofar as it alters the status quo restrictions on technical data and software directly related to the production of firearms or firearm parts using a 3D-printer or similar equipment.'' Accordingly, the announcement stated that such items will be treated as subject to control on the USML. (See announcement to similar effect in Commerce Department section above.)
DDTC released its Section 655 Annual Military Assistance Report for FY 2019
April 23, 2020: DDTC released its Section 655 Annual Military Assistance Report for FY 2019, showing for every country and territory the category, quantity, authorized value, and shipped value of all defense articles and services authorized. The 2019 Section 655 report is on the DDTC website at https://www.pmddtc.state.gov/sys_attachment.do?sysparm_referring_url=tear_off&view=true&sys_id=3b39303bdb1414105c3070808c9619e6 (43 pages).
DDTC Announces Changes To Several Requirements Due to COVID-19 Pandemic
April 23, 2020: In an effort to mitigate the impact of the Covid-19 pandemic, DDTC announced temporary changes to several of its requirements, including --
- A two-month extension of registrations required by ITAR Parts 122 and 129 as a manufacturer, exporter, and/or broker expiring between Feb. 29 and June 30, 2020;*
- An additional 30 days for responses to request-for-information letters related to voluntary and directed disclosures;
- Consideration of extensions for the submission of full voluntary disclosures on a case-by-case basis;
- A temporary modification in the limits on the duration of certain ITAR licenses, including a 6-month extension of expiration dates between March 13 and May 31, 2020 if there is no change in the scope, value, or addresses;*
- Modification of the requirement that a regular employee (including a long-term contract worker) work at the company’s facilities and, for regular employees working remotely, authorization for certain exchanges of technical data with the employer, so long as the worker is not located in Russia or an ITAR Sec 126.1 country, terminating July 31, 2020;*
- DDTC will send email scans of final action letters for General Correspondence requests submitted in writing, if email information has been provided;
- DDTC will send the applicant email scans of unclassified final action letters for DSP-85s submitted in writing. (Original sealed copies of these letters will be sent to the Defense Counterintelligence and Security Agency (DSCA) through the mail.);
- DDTC is re-issuing guidance for the expedited authorization of requests submitted in support of U.S. Operations (USOP) at DTCL SOP – USOPS Guidance;
- Congressional Notifications of proposed direct commercial sales (DCS) and foreign military sales (FMS) will be submitted electronically; and
- DDTC is accepting submissions of Foreign Military Sales (FMS) Part 130 reports by email.
*This measure became effective March 13, 2020.
See announcement on DDTC website at https://www.pmddtc.state.gov/ddtc_public and/or contact us for details about the scope of any of these changes that may affect you.
Department of the Treasury
OFAC Issues Venezuela-related General License (GL) 13E
April 6, 2020: The Office of Foreign Assets Control (OFAC) issued Venezuela-related General License (GL) 13E, “Authorizing Certain Activities Involving Nynas AB.” GL 13E extends the expiration date of this GL to May 14, 2020 to afford additional time for a proposed corporate restructuring that could significantly change Nynas AB’s ownership and control. GL 13E is on the OFAC website at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/venezuela_gl13e.pdf.
OFAC Raises Maximum Civil Penalties For Violations
April 9, 2020 – 85 Fed. Reg. 19884: OFAC raised the maximum civil penalties for violations of the laws and regulations it administers, due to inflation, as provided in the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended. The laws, prior amounts, and adjusted amounts include:
Law Prior Amount New Amount
International Emergency Economic Powers Act (IEEPA) $ 302,584* $ 307,922*
Trading with the Enemy Act (TWEA) $ 89,170 $ 90,743
Foreign Narcotics Kingpin Designation Act (FNKDA) $1,503,470 $1,529,991
* Or twice the amount of the underlying transaction, whichever is greater.
The new amounts took effect April 9, 2020.
OFAC Issues List Of Boycott Countries
April 9, 2020 -- 85 Fed. Reg. 20028: The Treasury Department published its quarterly list of countries that require or may require participation in, or cooperation with, an international boycott. The list remains unchanged since it was last published. It includes Iraq, Kuwait, Lebanon, Libya, Qatar, Saudi Arabia, Syria, the United Arab Emirates (UAE), and Yemen.
OFAC Amends The North Korea Sanctions Regulations
April 10, 2020 – 85 Fed. Reg. 20158: OFAC amended many provisions of the North Korea Sanctions Regulations (NKSR, 31 CFR part 510). The changes include incorporating blocking and correspondent account sanctions provisions; adding a new prohibition that is applicable to persons established or maintained outside the United States that are owned or controlled by a U.S. financial institution; adding exemptions relevant to newly added prohibitions; making technical and conforming edits to the definitions of ‘‘effective date,’’ ‘‘financial, material, or technological support,” and ‘‘North Korean person;’’ revising an interpretive provision about significant transactions; and amending the definition of luxury goods. These changes implement provisions in the North Korea Sanctions and Policy Enhancement Act of 2016, as amended by the Countering America's Adversaries Through Sanctions Act (CAATSA, 22 USC 9201 et seq.) and the National Defense Authorization Act for Fiscal Year 2020 (FY 2020 NDAA).
OFAC Issued A Fact Sheet, “Provision of Humanitarian Assistance and Trade to Combat COVID-19”
April 16, 2020: OFAC issued a Fact Sheet, “Provision of Humanitarian Assistance and Trade to Combat COVID-19,” providing guidance on the most relevant exemptions, exceptions, and authorizations for humanitarian assistance and trade under the OFAC-administered Iran, Venezuela, North Korea, Syria, Cuba, and Ukraine/Russia-related sanctions programs. This country-by-country resource includes country-by-country program summaries; lists of FAQs; lists and summaries of applicable GLs, specific licensing policies, and exemptions; and citations to other useful resources. This 10-page Fact Sheet is on the OFAC website at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/covid19_factsheet_20200416.pdf.
Contact OFAC If COVID-19 May Cause Delay In Meeting Deadlines
OFAC Issues General License 8F Related To Venezuela
April 21, 2020: OFAC issued GL 8F, “Authorizing Transactions Involving Petróleos de Venezuela, S.A. (PdVSA) Necessary for the Limited Maintenance of Essential Operations in Venezuela or the Wind Down of Operations in Venezuela for Certain Entities," extending the authorization for certain limited activities until December 1, 2020. GL 8F is on the OFAC website at https://www.treasury.gov/resource-center/sanctions/Programs/Documents/venezuela_gl8f.pdf.